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As the economy continues to struggle worldwide, it is having an effect on how companies are looking at expenses. As they try to rein in costs, businesses are being stingy with compensation and benefits, especially given the fact that the unemployment rate is high.

Pay is not going up, but healthcare premiums are. More companies are discontinuing their matching for the 401(k), and bonuses are smaller.

But workers also see that profits for companies have never been higher, that firms are sitting on mountains of cash, and the disconnect between how the companies are doing and how employees are doing rankles. It creates dissatisfaction that one business analyst says is not something that can last indefinitely.  Workers get a feeling that the system is rigged, and not in their favor, says business professor Adam Cobb.

A recent survey of 2,500 workers showed that nearly one-fifth of the employers had cut or canceled bonuses. About one-fourth of the companies were not hiring at all, and about half had either cut pay or laid people off within the last six months.

And, given the current conditions, it doesn’t look like things are going to change much. Company shareholders want profits. And although there has been an uptick in the economy there are a lot of uncertainties – the problems with the European Union, the housing situation and economic slowdown worldwide. Plus, with unemployment still greater than 8 percent, workers aren’t likely to move anywhere soon.

But many human resource specialists say this penny pinching by companies may be short-sighted. They may regret it when the economy starts to pick up again. If firms continue to cut pay and benefits, it may affect them long term, hurting their reputation and employee morale. It may make it harder to attract new talent when the company wants to hire again.

Another factor that companies need to take into account is the existence of social media. These online sites offer platforms for workers to air their complaints about their company’s actions. So, what a company does no longer stays just within the company. It is easier for potential employees to find out about the company’s culture and treatment of workers.

When you’re looking for skilled and reliable professionals for temporary and direct-hire assignments at your New York City company, call upon the recruiters at Winston Resources. We look forward to hearing from you!


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